Vouchers are also known as audit evidence. Business transactions are recorded in the books of accounts on the basis of written proof, and vouchers serve as that proof.
A voucher is a document that provides details relating to items recorded in accounting records. It may include a cash memo, bill, invoice, or similar supporting documents. These papers confirm that a transaction has actually taken place.
Other documents that act as vouchers include salary registers, wage sheets, credit notes, debit notes, insurance policies, credit and debit advice, passbooks, salesmen statements, agreements, dividend warrants, lease deeds, minute books, job cards, articles of association, opening journal entries, share certificates, and debenture certificates.
All such documents form the basis of entries in accounting books. The original documents are called primary vouchers, while duplicate or carbon copies are known as secondary vouchers.
What is a Voucher
W. Holmes defines a voucher as any documentary evidence in support of a transaction. Joseph Lancaster states that a voucher is any document by which the accuracy of book entries may be verified.
Similarly, Ronald A. Irish explains that a voucher may be a receipt, invoice, agreement, or any written document that confirms a transaction. In simple terms, a voucher is written proof that supports accounting entries.
Characteristics of Vouchers
1. Voucher is Evidence
A voucher serves as evidence of a transaction. It provides proof that a business dealing has taken place and can be used for future reference.
2. Written Form
A voucher must always be in written form. Oral or verbal statements cannot be accepted as valid evidence in accounting records.
3. Entry in Books
Entries in the books of accounts are made based on vouchers. Without proper supporting documents, accounting entries cannot be considered reliable.
4. Shows Nature of Transaction
A voucher clearly indicates the nature of the transaction. It reflects whether the transaction relates to purchases, sales, payments, receipts, or expenses.
5. Business Name
Vouchers must be issued in the name of the business. Documents in the name of employees or managers are not considered valid for accounting purposes.
6. Date of Voucher
Every voucher carries a date, which shows when the transaction occurred. The date must relate to the relevant accounting period to ensure proper matching of income and expenses.
7. Revenue Stamps
In certain cases, vouchers must include revenue stamps as required under the Stamp Act. This makes the document legally valid.
8. Signature of Manager
A voucher usually contains the signature of the seller, and it is approved by the buyer or manager. This approval confirms the authenticity of the transaction.
9. Amount in Words and Figures
The voucher mentions the amount in both words and figures. This reduces the chances of error or manipulation.
10. Accounting Year
The voucher must relate to the appropriate accounting year. Transactions are recorded in the correct period to determine accurate financial results.
11. Genuine Voucher
A voucher must be genuine and related to actual business transactions. Only original and authentic documents are acceptable as valid evidence.
Different Types of Vouchers
1. Primary Vouchers
Primary vouchers are original documents that support a business transaction. Examples include cash memos, invoices, and bills. These are considered the most reliable form of evidence.
2. Secondary Vouchers
Secondary vouchers are duplicate copies used when original documents are not available. These may include carbon copies, duplicate bills, or copies of resolutions.
Examples of Vouchers
1. Cash Received
Examples include counterfoils, carbon copies of receipts issued, and related correspondence. These documents confirm receipt of cash.
2. Cash Paid
Invoices, bills, salary registers, wage books, agreements, and correspondence serve as vouchers for cash payments.
3. Purchases
Purchase transactions are supported by order copies, invoices, correspondence, and entries in the goods inward book.
4. Purchase Returns
Credit notes, goods outward books, and correspondence are used as evidence for purchase returns.
5. Sales
Sales transactions are supported by order letters, sales invoices, goods outward books, and related correspondence.
6. Sales Returns
Credit notes, goods inward books, and correspondence provide evidence for sales returns.
7. Bills of Exchange
Cash book entries and bills on hand serve as vouchers for bills of exchange.
8. Asset Purchases
Documents such as invoices, agreements, deeds, correspondence, cash memos, and affidavits support asset purchases.
9. Bank Charges
Debit advice, standing orders, and bank correspondence act as vouchers for bank-related charges.
10. Others
Other examples include share warrants, insurance policies, letters of credit, bills of entry, travel tickets, minute books, and articles of association.
Conclusion
Vouchers play a vital role in accounting by providing reliable evidence for every transaction recorded in the books. They ensure accuracy, transparency, and accountability in financial reporting.
By maintaining proper vouchers, businesses can support their accounting records, detect errors, and prevent fraud. For auditors, vouchers serve as the foundation for verifying transactions and ensuring that financial statements present a true and fair view of the business.
See Also: Different Types Of Audit of Journals
